New Bank Fees Push More Americans to Credit Unions Last Friday, after Bank of America's (BAC) announcement of new fees on debit cards, retired postal worker Victoria Lee took her adult daughters to her local USPS Credit Union. "[My daughters opened] free checking accounts with no charges for the use of debit cards," Lee said. Like many Americans who are carefully watching every dollar, the Florida resident said she was grateful to have an alternative to retail Wall Street banks.

Meanwhile, a record-breaking 3,200 new checking accounts were opened over the weekend at the Navy Federal Credit Union, the world's largest credit union with 3.7 million members and nearly $48 billion in assets. The weekend surge -- which crushed the previous high of 2,500 -- fits into a larger trend for the credit union, which serves the Department of Defense and active duty military. It has had annual growth between 6.3% and 6.7% since 2007, and is on track to record a 14% uptick in membership this year, said Tisa Head, the senior vice president of savings products. In addition to its fee-free debit cards and accounts, another driver for the year's projected double-digit membership increase has been the credit union's willingness to post pay early for active duty members who use the Active Duty Checking account.

"You can't help but draw some lines to current economic growth," said Nancy DeDona, vice president of membership.

Amidst the financial chaos on Wall Street in the last few years, and with the biggest names in retail consumer banking getting monthly, if not weekly, black eyes, credit unions have been steadily gaining ground. Since 2007, the credit union membership in the United States has increased from 86.8 million to more than 91 million, according to figures from National Credit Union Administration. Total assets have increased from $755 billion to more $942.5 billion at more than 7,290 credit union organizations.

Patricia Briotta, a spokeswoman for National Association of Federal Credit Unions, attributes the recent growth to people's rising desire to find alternatives to dealing with Wall Street.

"[The growth] mirrors the time when people were looking and giving [credit unions] greater value. This is a Main Street option," she said. The organization launched an online credit union search engine called CU Lookup in 2008, which allows consumers to search for local organizations.

Technology Reduces the Stigma of Smallness

The 55-year-old NAFT Federal Credit Union, an acronym for Neighbors and Families Together, in Pharr, Texas, is another of the thousands of credit unions dotting the American financial landscape. It has grown steadily to a membership of nearly 9,000 members and assets of $57 million. That's small by industry standards, but NAFT does what these nonprofit financial institutions do best: It caters the needs of its local community, providing a high level of personalized customer service. Five locations, two of which are at local high schools to promote financial literacy, serve the hard-working community.

"We are not trying to grow assets but we are trying to take in new members," said credit union president Suzy Brinkman-Doughty.To do that, her credit union is focusing on attracting younger clients. "We have to meet needs of younger people. They want to do online banking and have convenience and immediacy." As a result, the Texas credit union has a basic online banking platform; there is no mobile app or fancy advertising campaign. But the credit union gets the job done, without a fee.

Credit unions are nonprofit, member-owned institutions and were created at the national level under the 1934 Federal Credit Union Act. Originally, most credit unions were associated with labor or worship affiliations, but today, many are open to all. They don't do commercial lending, but generally offer no- or low-fee checking accounts, low-minimum balances to open account and lower interest rates for small loans and credit cards, capped by law at 18% for federal credit unions.

The historical drawbacks to credit unions include fewer locations, smaller ATM networks, and eligibility requirements. With their emphasis on saving, many credit unions also require a nominal deposit into a share account -- the credit union term for a savings account. But the stigmas surrounding credit unions' accessibility are fading as technology and more diverse financial services allow them to compete for the 24/7 customer who values mobility. The Navy Federal Credit Union has nearly 200 locations around the world, and its ATM network stretches all the way to the tiny African nation of Djibouti.

"In 1979, I closed my checking account at a bank and I have never regretted it," said NAFT's Brinkman-Doughty. "If you really don't want to pay a fee, you don't have to. [Retail banks'] goal is to make money for stockholders. That is not our goal."






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Hamilton

'Bank of America',,, ...is that some kind of oxymoron?

October 08 2011 at 2:39 PM Report abuse rate up rate down Reply
Hytjtj

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As a taxpayer, I would like to know why credit unions DO NOT pay any federal taxes. If it walks, talks, smells and acts like a bank......it should also pay federal tax like a bank. This is several BILLION dollars of tax money that is not being paid to lessen all of our tax burdens.

October 08 2011 at 3:14 AM Report abuse +1 rate up rate down Reply
pyeatpr

Because of the new law, big banks will finally have to provide customer service and provide a product the customer wants. There are small banks and credit unions that are not affected by the swipe fee law because they have less than $10 Billion dollars in assets. Those banks and credit unions will reach out to potential customers and offer services without excessive fees. The big banks want you to believe all banks are going to eventually charge checking account and debit card fees. That is not the case. As a consumer, you have a choice. Leave those big banks if you do not want to pay the fees. Credit unions and community banks would be glad to have your business and would not feel entitled to your money.

October 07 2011 at 3:26 PM Report abuse rate up rate down Reply
JohnC

People wonder why Teddy Rosevelt broke up the " big" Banks in the early 20th century..Some of the most powerful men in the world - and some of the most corrupt..Great President . He saw the hand writing on the wall a 100 years ago..He - President Rosevelt was right and the big Banks were wong..Do it again...

October 07 2011 at 4:43 AM Report abuse rate up rate down Reply
Terry

Yes-credit unions are The Answer!!!!!!!!!!!!! Folks-check them out!

October 06 2011 at 10:55 AM Report abuse +1 rate up rate down Reply
dougwelter

As a taxpayer, I would like to know why credit unions DO NOT pay any federal taxes. If it walks, talks, smells and acts like a bank......it should also pay federal tax like a bank. This is several BILLION dollars of tax money that is not being paid to lessen all of our tax burdens.

The original legislation enacted years ago for a credit union have been grossly stretched by credit unions. How many are affliliated with companies anymore?

October 06 2011 at 9:25 AM Report abuse -3 rate up rate down Reply
1 reply to dougwelter's comment
realseabee

As what happens in blogs, people tend to either not tell the full story or don't have any idea what they are talking about.

True, Credit Unions (CU) do not pay any federal taxes directly to the federal government. Why you ask. Because they are not-for-profit institutions. CU's use the interest from loans, that is the loaning of the members money to other members, to pay interest on Savings accounts, Checking accounts, CD, and operational costs, e.g., payroll of its employee's.

However, that interest paid to members is reported on Form 1099 as interest income to the IRS, which is where the federal government gets its share. The CU employees of course pay their taxes through the payroll as most of us do.

Banks on the other hand have investors, and those "investors" do not need to be members/customers. To pay investors, Banks have to turn a profit, hence they pay taxes directly to the government.

Bottom line, EVERYBODY pays taxes. Unless you are part of the corrupt religious institutions. But that is another story.

October 06 2011 at 10:09 AM Report abuse +3 rate up rate down Reply
JohnC

I belonged to the Tel;ephone Credit Union for over 25 years - great service.. One thing they , the Credit Union don't tell you is that they don't report to the three Credit Bureau's UNLESS your late..I financed two cars before I relaized I wasn't building up any credit history...Same thing if you get a Mortgage...If ya refinace to a regular bank your credit history of that home mortgae won't be on your credit report unless you were late...Service was great but the rates weren't any better than a regular bank ...No regrets ....

October 06 2011 at 7:51 AM Report abuse -1 rate up rate down Reply
1 reply to JohnC's comment
realseabee

Interesting. My Credit Union, the Navy Federal, does report to the Credit Bureau's, all three. All my loans, credit cards, mortgage's, etc are listed on my reports, and those are not late reports. You might want to recheck that or if it is true, change credit unions. BTW, the NFCU has always beat Banks and S&L rates.

October 06 2011 at 9:40 AM Report abuse +3 rate up rate down Reply
1 reply to realseabee's comment
JohnC

I retired in 2004 and as of then the telephone Credit Union did not report to the THREE Credit bureaus..
Perhaps it changed since then ; maybe the Navy federal Credit Union has alwys reported the the
Credit Bureau's ..I'm not anti-credit unions ..just telling you the way it was/is with the one I belonged to
..As I said before I financed a car in 1984 and it wasn't on my credit report at a later date...Same with co-workers who belonged to the same CU ...Thought I might have fallen thru a crack but it happened to other co-workers as well....

October 06 2011 at 1:11 PM Report abuse rate up rate down
democracks0

EVAN WENT IN AFTER EVERYONE LEFT HERE LAST NIGHT AND VOTED COMMENTS DOWN. SOME AT LEAST 12 TIMES. AND THEN VOTED ALL HIS COMMENTS UP. ROTFLMAO. WHAT A DOPE. HOW PATHETIC.

October 05 2011 at 11:10 PM Report abuse rate up rate down Reply
Doug And Lena Sc

credit unions don't pay income taxes, like banks, how will the Federal Government feed its addiction to money

October 05 2011 at 10:26 PM Report abuse -3 rate up rate down Reply
scott7841

Credit Unions will do well for the next 3 - 5 years at which point they will be squeezed / regulated out. I have it from a very good source 3 years ago that banking regulations were moving towards 5 - 10 major banks being the only banks around. Think about the takeovers and mergers over the past 2 years. Once the mega bank system is in place credit unions and small community banks will not be able to compete with this group of banks due to favorable financing given to them from the Fed (0% interest) while the smaller banks and credit unions will have to pay 2% - 3% and pass the interest on to customers. They will be choked into non-existance. Once the small players are removed it will be a Wall Street windfall of epic proportions. The american public and monetary system will be at the discreational whim of Wall Street. Play by our rules, pay by our rules, or not be able to survive. Welcome to the newest third world country of the planet...............HOIWS THAT HOPE AND CHANGE WORKING FOR YOU NOW?

October 05 2011 at 5:05 PM Report abuse +1 rate up rate down Reply
1 reply to scott7841's comment
Scotty143124

Who can RWers in this country be so clueless and oblivious....

It's the GOP that these bankers and Wall-Street vote for. It's the GOP that is against any regulation of these large banks. It's the GOP that believes in the laissez-faire and zero government and allowing corporations do do whatever they can to make a profit, all under the notion of capitalism.

"Welcome to the newest third world country of the planet............" -- Indeed, which party is determined to eliminate minimum wage, all benefits, provide no health care, have people work 2 to 3 jobs just to make ends meet, remove any regulation, allow companies and the rich to do whatever they want to generate a profit etc. All trademarks of a 3rd world country, none in any 1st world country (fact).

----------------
Ironically, it was Andrew Jackson -- a democrat -- that predicted in the early 1800s that banks:

* Concentrated the nation's financial strength in a single institution.
* Exposed the government to control by foreign interests.
* Served mainly to make the rich richer.
* Exercised too much control over members of Congress.
* Favored northeastern states over southern and western states.
* Banks are controlled by a few select families.
* Banks have a long history of instigating wars between nations, forcing them to borrow funding to pay for them.

October 06 2011 at 9:25 AM Report abuse rate up rate down Reply